Video: Fleecing of America

COLUMBUS, Ohio — It's the talk of Ohio: Why did the state invest $50 million from the workers' comp fund — meant for helping injured workers — in rare coins?

"Only fools and politicians would do something like that," says one Columbus resident.

"It's a dumb idea," agrees Tom Hayes, who normally works as director of the Ohio Lottery Commission and was asked to sort it all out.

"The difficulty is that we have to figure out what happened in the past and how to fix it going forward," says Hayes, who chairs the Governor's Bureau of Workers' Compensation Review Team.

Here's what they know so far: Rare coin dealer Tom Noe convinced the state eight years ago to let him invest some of the fund's money in coins. This spring, after reporters started nosing around, Noe acknowledged, through his attorney, that the coin fund is at least $12 million short; though he still says he hasn't done anything illegal.

"Mr. Noe has not admitted any wrongdoing of any kind in connection with the coin fund or anything else in his life," says attorney William Wilkinson.

Then, investigators began looking at the state's investments made by other money managers and found even more losses. Although this saga starts with coins, when you peel back the layers it's a lot more complex, involving hedge funds, political donations, golf outings and million-dollar vacation homes. In other words, it's an old-fashioned political scandal.

Ohio Democrats are crying foul, focusing on Noe's Republican connections. He's given money to the governor, the president, six of the seven state Supreme Court justices — not to mention California Gov. Arnold Schwarzenegger.

Ordinary Ohioans are just rolling their eyes, calling it politics "more so than usual."

Ohio Gov. Bob Taft, a Republican, says the $18 billion workers' fund is safe. A new state law prohibits investments in coins, art, collectibles and horses.

And in a further attempt to regain credibility, they've hired famed auction house Sotheby's to appraise the state's coin collection. But many say selling the coins will be easier than regaining the public's lost trust.